Consolidation could wipe out hundreds of flying car startups
- Hundreds of startups are vying for the “flying car” market, which is expected to reach $150.9 billion by 2035.
- Experts predict that only a small percentage of them will survive for the next five to ten years.
- At least two waves of consolidation should hit, the first in a year or two, they said.
Hundreds of startups are hoping to break into the emerging urban air mobility market – aka the flying car industry – which is expected to be worth $150.9 billion by 2035. But industry experts predict that within five to 10 years, the vast majority no longer exist as independent players.
The culling will be severe, said Stephan Baur, director of global consultancy Roland Berger. Baur told Insider that he predicts that of the 500 to 600 urban air mobility companies that exist today, only 40 to 50 will exist in 10 years.
“Of the 10 biggest companies that everyone knows, I think only a handful, maybe half of them, will survive the next 10 years,” Baur said.
This consolidation will probably occur in two waves. The first could hit within the next two years, as companies developing electric vertical take-off and landing vehicles, or eVTOLs, begin to see which designs gain regulatory approval, a major hurdle for the emerging industry, Baur said. . He also predicted that a number of startups would run out of funding in the next two years.
The second wave should hit towards the end of the decade, he said, when the industry begins to see which companies are performing best in the market – it will take about that long for eVTOL operations to ramp up. . At this point, the most successful companies will likely start to buy out less successful companies as well or merge to pool resources and scale their operations faster, he said.
Experts predict urban air mobility will mimic the automobile
A mature urban air mobility market could mimic the evolution of the automotive industry. The early 20th century saw hundreds of automotive companies, which over time consolidated into today’s handful of big players. Automotive has also seen a dominant design evolve, which Baur says will happen for eVTOLs when it becomes clear what type of design works best. When the dominant design becomes clear, the industry will likely experience a wave of consolidation as companies seek to combine technology, financial might and human resources.
“I think the next decade will look a lot like what we’ve seen in automotive around autonomous vehicle systems and electric vehicles,” Tom Mayor, partner at global management consulting firm Kearney, told Insider. “Just a bunch of shifting alliances, shifting partnerships. It’s going to be a continuous roll.”
Andres Mendoza Pena, also a Kearney partner, said urban air mobility could become a “winners-take-all” market, in which a handful of players dominate the field, like Uber and Lyft in the carpooling industry. But it depends on how the market develops and whether eVTOL manufacturers continue to manage both vehicle manufacturing and air taxi service operation themselves or if they further intrude in an original equipment manufacturer and airline structure.
The mayor predicts the latter, with the manufacturing side resembling a Boeing/Airbus duopoly and the ridesharing side resembling more of an airline model, with regional players dominating their respective markets. The market could split even further between commercial and military operations, which could lead to two separate markets with different participants, Mendoza Pena said.
Once a handful of eVTOL manufacturers successfully certify their planes and bring their product to market, they should attract even more investors, experts said, making it harder for other companies to attract capital to finance their own development.
“I think it will be in a five-year window, we’ll start to see who comes out on top,” Mendoza Pena said.